Experts Question Success, as Starbucks Continues Raising Prices While Cutting Discounts and Promotions

According to The Wall Street Journal (WSJ), newly appointed CEO Brian Niccol plans to improve Starbucks' café operations and focus more on selling premium coffee while promoting seasonal beverages. The strategy aims to improve profitability, such as net income, rather than just boosting sales.

Until now, beverage chains like Starbucks and McDonald's have relied more on discounts to win over customers who have grown weary of price increases. In particular, as lower-income consumers reduce dining out, these franchises have enhanced discount benefits as a way to attract them. Even Starbucks, which has traditionally avoided offering discounts and promotions, strengthened its app-based promotions last year in response to a decline in customers.

However, Starbucks has been reducing the promotions and discounts it has offered in U.S. stores over the past year in an effort to improve profitability.

Since the beginning of this year, Starbucks has scaled back its "Buy One, Get One Free" or 50% off promotions. Weekly promotions like offering extra reward points on Tuesdays and providing discounts on multiple beverage purchases on Saturdays have also been discontinued. Instead, the company has no plans to run extensive discount promotions this holiday season and will focus on advertising its seasonal beverages. Customers have expressed dissatisfaction, saying, “They’re quick to raise prices but are cutting back on promotions and discounts, so I won’t be visiting as often as before.”

Starbucks has experienced declining sales in both the U.S. and China this year and has faced challenges, including twice lowering its sales forecast.

CEO Niccol has been swiftly driving change since taking office.

Although Niccol wants to establish Starbucks as a premium brand that offers minimal discounts, retail industry experts are skeptical. Most consumers view Starbucks as a “mass brand,” while the recently booming boutique coffee shops across the nation are recognized as “premium brands.”

By Hwandong Cho

<Hwandong Cho>